Poland and the EU

Poland's minister for regional development

ELŻBIETA BIEŃKOWSKA, Poland's minister for regional development, manages the biggest allocation of European Union funding sent to any single member state. Poland was awarded nearly €68 billion ($89 billion) of structural and cohesion funds (SCF) in the EU's 2007-2013 budget. When Polish 'match funding' is included, the spending package rises to a whopping €112 billion. If the current negotiations in Brussels can be concluded this winter that amount may even be increased for 2014-2020.

It is partly thanks to these funds that Poland's economy has been a relative star performer in Europe. The economy is also helped by convergence with neighbouring Germany, a large internal market, risk-averse banks, and the free-floating złoty. "Our negotiators are now flying to Brussels with six years of proof that this money works," says Mrs Bieńkowska. "We don't accept that it is simply aid for Europe's poor. It is Europe's most important driver of growth."

In Mrs Bieńkowska’s view demand throughout the EU is boosted by Poland's EU-funded projects. They often require importing machinery from western Europe; German, British and French firms can be direct recipients of the funds, if they apply for EU-backed tenders in Poland. Not everyone buys her view. At the EU summit last month, net contributors wanted to cut the SCF in the name of austerity.

Mrs Bieńkowska was born in 1964, into a family of railway employees. She was raised in the industrial city of Mysłowice in Upper Silesia, famous for its coal mines and steel mills. Her teenage years coincided with the rise of the Solidarność movement. Though it began in Gdańsk, it was Solidarność's control of Upper Silesian coal production that brought the Communist regime to its knees. "They were trying to suffocate us," she recalls. "I really hated them. Those years had a big influence on me."

Mrs Bieńkowska took a degree in oriental studies (majoring in Persian) at the Jagiellonian University in nearby Kraków in 1989. After starting a family and further studies in public administration, she entered local government. From 1996 to 2007, Ms Bieńkowska was based in Katowice, overseeing development funds for Upper Silesia, a job which soon brought her into contact with the EU. She earned a reputation as an effective administrator, took an MBA at the Warsaw School of Economics and began passing on her expertise by lecturing at universities.

Not long after he became prime minister, Donald Tusk summoned her to Warsaw for a meeting. "I didn't know what it was about, but when I was in the taxi on my way to parliament, I heard the news on the radio," she says. "I was named as a cabinet minister in the new government. I couldn't believe it until the driver looked over his shoulder and said, 'That's you'."

Her first term saw the completion of 80,000 projects, including a liquefied natural gas port at Świnoujście and the development of Poland's 'aviation valley' (products include the Black Hawk helicopter). It also featured the Euro 2012 football championship, which hastened the allocation EU funds and a building frenzy that included national highways as well as a new airport, a new stadium and a railway extension for the capital. But the construction sector was decimated by a sudden surge of competition, price inflation of raw materials and flawed tender regulations. "We've learned our lesson the hard way, and it won't happen again," Mrs Bieńkowska says.

Now seen as one of Mr Tusk's most loyal confidants, Mrs Bieńkowska plays a supporting role for the Europe minister, Piotr Serafin, Poland's chief negotiator on the EU budget. Because of her brief, Mrs Bieńkowska is able to work as a diplomatic side channel to other European capitals. Ahead of French president François Hollande's recent visit to Warsaw and the Franco-Polish agreement on the EU budget, she met with French defence minister, Jean-Yves Le Drian, a fellow advocate of regional policy. She is relieved that the EU budget talks have not been stalled by a British veto, but sees a conclusion any later than March 2013 as a potential problem for Poland's funding programme.

Political analysts say Mrs Bieńkowska's lack of a political past puts her in an unusual situation. Without belonging to any faction within the ruling Civic Platform party, she hasn't formed any supportive alliances. Asked whether she could ever see herself as a future prime minister, she replies: "Never. I'm not a politician. I'm a technocrat."

What you have seen is superficial, Warsaw does not reflect what is happening in Poland. Many of the "fancy" new projects have no economic justification, for example the national stadium is already deep in the red with no hope of ever generating sustainable revenue. Building this stadium resulted in
bankrupting local developer Hydrobudowa SA as well as many
local businesses.

Yes it is scary, Poland thanks to "generous" EU founds is quickly
following Greece. We have fancy infrastructure with "over-passing the German quality" and close to 13% unemployment with millions of Poles working in other EU countries just to survive. Quite and "achievement" for a star economy! I guess president Komorowski
and the current government should be proud of that!
But I guess true reality must be hard to spot while driving in limo around Warsaw.

New infrastructure could have been built with local founds no EU funds were needed. If you want to know what the unemployment would be then do simple calculation on the rate of capital return that old EU countries get vs the new ones like Poland. It is estimated that Poland gets between 0,2 to 0,5 euro of economical benefit for each euro invested, on the other hand Germany gets between 1 and 1,5 euro. So let's take middle of that to be 1 euro of economical return for 1 euro invested. Apply that return to Polish investment and you get at least 200% increase in return on capital. With this kind of capital growth rate in just few years local founds would easily eclipse any matching founds from EU. The only conclusion one can draw is that taking EU founds is economically irresponsible, not to mention the corruption that comes with it.

So who is really benefiting from cohesion founds?

You mention number of infrastructure projects being developed. The cost of 1km of polish autostrada is 50% to 100% more then comparable road in Germany! I guess quality comes at a price. At the same time once you get of the sound barrier tunnels surrounding the autostradas it is a different world of potholes everywhere! You do not have to live in the 'middle of nowhere' to experience that, just take the express road from Krakow's airport to the city center.

If everything is so good then why so many people had to leave? When was the last time you have checked Balcerowicz's debt clock?

Who knows what would happen with globalization but I can tell you that polish people are very very resourceful and they would do fine. If you want an example then compare agricultural subsidies that EU awards. Polish farmers despite being discriminated to the tune of about 1000% per farm(!) still produce great tasting food at competitive prices.

Do not even try to bring Iran or Belorussian ways into this discussion!

But observing what is currently going in Poland I think you would be happy to bring the Belorussian way to Poland.

Why are you trying to reduce Polish people to a subjugated EU workforce unable to comprehend simple economical concept like RoI? Perhaps this is your personal experience or is this the EU vision?

You have completely distorted my point that the so called old EU is deriving *most* benefits of the EU cohesion founds.

Yes, polish people want to live like Germans, Dutch, or the Austrians, and just like them they give a damm about who the employer is, convince me otherwise.

You are wrong about the comfortable retirement guaranteed by their employers like who Fiat, Opel, Unicredit or perhaps Amber Gold? Polish retirement system OFE was and is plaundered (there is no better word) through fixed maintenance fees paid to so called pension funds which is guaranteed by law! Our current demographic trends points to a bleak future for any future pensioner, just check how Greeks are doing.

Stop this Soviet rant, I know what it was and what it is like now. I can give countless example of how EU investments have destroyed local business in Poland.

Soviet apparatchik Leszek Balcerowicz (member of PZPR, "explorer" at Institute of Basic Problems of Marxism-Leninism) is very naive. Poland has 20 years to close the gap with Germany, assuming that Germany will stay in place. During socialist Civic-Platform regime
Poland has no chance to catch up Slovakia and Lithuania just overtook Poland in 2012.

I am not attacking the messenger, I am just asking who you are Didomyk!

The so called "generous assistance" is such a misconception. It is an assistance to the old EU not Poland, this should answer your question as to "..who has actually derived benefits from this RoI ?".

You want intelligent response then consider this. I remember talking to a high level EU bureaucrat at the time of discussion of EU enlargement about the conditions of Polish accession. Privately he could not believe that Poland is willing to agree to such bad terms, granted the guy was British but that only supports my point.

There is NO free competitive market in the EU, to this day Polish people and others from the so called “new” countries are discriminated in the EU. At the same time one of the conditions of joining EU was free flow of foreign capital into Poland for a decade before joining in 2004!. Do your own thinking as to what it means and do not patronize me with talk of 'old' mentality.

I do not know who you are but your talk about “other enterprises, led by forward looking younger generation, will spring up from nowhere. “ is simply ludicrous!

They will spring out of what? The ruble that was left? You need to educate yourself on the capital formation before making statements like that.

“ "...current demographic trends points to a bleak future for any future pensioner" is , to put it mildly, a look backwards, certainly not a vision of the future.”

Tell it to my mother trying to survive on 800 pln a month, it is already happening.

As anyone living in the UK will confirm, the Poles are still there. And with perhaps the highest birth rate in the UK, their number is physically increasing, not falling. By contrast, in Poland itself Poles have one of the lowest birth rates in the whole of Europe. Surely these facts mean something, e.g. regarding Polish welfare.

Another undeniable fact is that after a rapid drop, since 2008 unemployment has been rising steadily in Poland and this winter its expected to rise much more. I don't blame Italians for looking after their compatriots first, but I do blame my compatriots (admittedly this was long before Civic Platform) for selling Polish car factories cheap to the Italians in the first place.

The problem with Civic (or rather Crony) Platform is that they've been selling to foreigners and privatising all the state assets they can get their grubby hands on ever since 2007. The other problem is that all of them, without exception, Donald Tusk, Ewa Bieńkowska, Sławomir Nowak, Boni, Grad or now probably also Budzianowski are unbelievably incompetent. That's why for example in once prosperous Silesia from where Mrs Bieńkowska, the daughter of railway workers hails, for the second week in row all the trains are suddenly cancelled. One of the reasons are the schoolboy mistakes of Crony Platform administrators, ordering for instance several different types of locomotives with quite different stopping times, or "investing" millions into PR, for rail staff to tell passengers jokes when there are cancellations and sending delegates on "fact finding missions" to Disneyland when those same millions could be invested in cleaning carriages. Trains ran faster and more regularly in the 19th century. A journey from Szczecin to Wrocław now takes 9 or 10 hours and means changing trains in Berlin!

And here we come to the crux of the matter. The lion's share of those billions of euro, ostensibly called "structural and cohesion funds" actually goes back to the biggest contributor, Germany. It's very simple, for instance German companies win contracts to build Poland's Euro 2012 football stadiums, the most expensive stadiums ever. The difference between a stadium and a factory or a shipyard is that in the long run only the latter generate wealth and employment. Unlike Portugal's Euro stadiums, Poland's stadiums are still standing but that's only because they've only just been built. What makes you think we're any different to Portugal? Especially that contrary to any common sense, Tusk is now again eagerly campaigning for Poland to join the eurozone asap.

Common sense tells me to be against joining the single currency, but I'm not against the EU per se. I'm not against Germany, they've never had it so good and good luck to them. I'm certainly not against Angela Merkel, without doubt the most competent politician in Europe at present. However, the general pattern whereby Germany steadily grows richer while other states go bankrupt cannot continue and if the EU is to survive this sick arrangement must change.

Under the post-Soviet Civic Platform regime Poland spends on R&D only 0.74% of its GDP (average of the European Union is 2%, Germany spends 2.6%). Gap between Germany and the Poland deepens and the Polish economy from year to year is becoming more complementary peripheral economy of Germany.

I just returned from a short trip to Europe, including Poland.
What brought my attention was an excellent metro, super
modern trams and fantastic buses. At least 10 new very tall
high-scrapers, the beautiful stadium, all designed in a fancy way,
were just recently constructed.
I drove the car around Warsaw – the highways were reaching or
over-passing the German quality. A relative prosperity hit
my eyes.

Just by sheer coincidence I expressed my opinion to Polish
President Bronislaw Komorowski, during an ad hock reception,
at Polski Theater in Warsaw. He was visibly moved and said:
”…from now on I must stress our achievements with more rosy
glasses…”. Yes, Poland today became a big thing…

The only scary aspect for some is the speed how fast privatization
is progressing. Poles, seem to do not care. They are privatizing
even the national railways… Scary, indeed.

But let's see the "economic policy for the 21st century".
Poland's 2013 budget assumes 37,4 proc increase in fees collected from citizens, that comes to about 500 pln per head or 2000 pln per statistical family! Must be EU mandated Greek Style (Sorry Psy) revenue increase so Poland can finally commit eurokiri.

Can you even comprehend what it means?

On a practical side I suggest we just give it to them to avoid all the extra trouble of contact with the "enforcers". This new bunch of them is way more dangerous then "old" commie style.

Be stubborn not ignorant!

Open your eyes, take a look around you and start asking some simple questions this how sound economic policy for the 21st century will start.

During 20 years in Poland only 2 cabinets pursued libertarian conservative policy: Jan Olszewski government in 1992 and Jarosław Kaczyński government in 2007. Remainder focused on socialist redistribution and cooptation into the Post-Soviet system by the growth of bureaucracy and public expenditure.

So what happened to the post titled "Poland"s past: a difficult film" on Poklosie by one A.H.? The article suddenly, and very mysteriously, disappeared, as if never written... Someone A.H.-minded could summarize the outcome as "the Economist's past: a difficult post", and move on to ponder on the wicked nature of the English newsmen and their unbecoming conduct.

It is nice that the Economist's editors have noticed a bad product, even if belatedly and only after a massive outcry of enraged readers. But it would be much more appropriate to recognize own error, even if quite embarrassing, in a transparent manner, rather than try to sweep it under the carpet. If you mess up, own up to it.

What is really amazing to read here is not the article itself but the comments by those extreme-tending Poles who miss completely the perspective and facts. Fact is that the first round of EU funds which Poland received were spent in much better way if one compares with previous similar beneficiaries like Portugal, Greece, Spain and Ireland. Fact is that Poland navigated the first period of receiving EU funding in much better shape than other EU members. These are relevant comparisons in which Poland indeed excels and she, the Persian-fluent minister, deserves high notes. It is also due to the political environment which leaves this area free from destructive interference.

All this should obviously be seen in a perspective that Poland is still far behind the richest EU members. However the distance to those members who were living on borrowed money beyond means has shrunk and is shrinking by the day.

One final word should be added about the migration which happened after Poland joined the EU in 2004. This was numerically significant (est. 1.5 million) but not unproportionally high relative to the total population of 38 millions. But what is the most critical factor here is that the time of labor market openings was, as we see it now, perfectly synchronised with the peak of the bubble: Ireland, UK, Spain were the main targets of migration where unlimited job opportunities were present. These times are obviously over forever and there is nothing to speak about the migration from Poland now. It was thus just a temporary fad caused by the overheated economies.

Sad, uninformed article, that seems to lack any journalistic skepticism.
Poland is very poor, extremely corrupt country that has no hope of being prosperous country. If it is doing so good why have millions of Poles fled to the West. Surely not to invest their millions into yachts or race cars, but rather to find a job and decent life that their ruined country cannot provide.

Most Poles don't live in Warsaw, and those who do, don't live in places for rich tourists.
Average Pole counts himself lucky if he earns 400 euro and has a flat with two rooms. He counts himself as rich even.

"It is currently estimated (Balcerowicz) that Poland needs another 20 years to close the gap"
Funny, I remember 1992, and media saying we only need 20 years to close the gap with the West, 20 years later, they are still saying we need 20 years.

Minister Bienkowska is a highly effective Polish technocrat. The department she runs is a shining light in Poland's dismally inefficient bureacracy. As she has no party political role to play she is focussed on ensuring that allocated EU funds are properly and fully utilised. That includes open criticism of those ministeries, State owned utilities and local and regional governments which still cannot get their act together, of which the most notorious is the State railway network.

She is not averse to tonking (male) prima donna politicians of which there are many and who nowadays avoid getting into public argument with her as she shows them up for what they are: incompetent!
As a technocrat she s a leading example of what the fairer sex can achieve in what is a highly conservative traditional country. Would there were a lot more like her!